ECON 2110 - TEST 1 Questions And Answers

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ECON 2110 - TEST 1 Questions And
Answers
Useqtheqeconomicqmodel:qAsqyouqspendqmoreqtimeqstudying,qweqwouldqexpectqtheqcostqof
theqtimeqyouqspendqstudying
a.qtoqriseqatqtheqmargin,qifqthereqareqotherqthingsqyouqlikeqtoqdo
b.qtoqfallqatqtheqmargin,qbecauseqyouqcanqspreadqyourqtuitionqpaymentqoverqmore
studyingqhours
c.qtoqfallqatqtheqmargin,qbecauseqtheqbenefitsqofqadditionalqstudyingqareqdiminishing
d.qtoqstayqtheqsame,qbecauseqyourqtuitionqisqaqsunkqcostq-qCORRECTqqANSWER-
toqriseqatqtheqmargin,qifqthereqareqotherqthingsqyouqlikeqtoqdo

105.
Aqpersonqhasqaqcomparativeqadvantageqinqanqactivityqwheneverqshe
a.
canqdoqtheqactivityqinqlessqtimeqthanqotherqpeople
b.qhasqanqabsoluteqadvantageqinqtheqactivity
c.qcanqperformqtheqactivityqatqaqlowerqopportunityqcostqthanqcanqotherqpeopleq**
d.qcanqdoqeverythingqbetterqthanqanyoneqelse
e.qAllqofqtheqaboveq-qCORRECTqqANSWER-

106.qMarginalqbenefitqisqtheqbenefit
a.qthatqyourqactivityqprovidesqtoqsomeoneqelse.
b.qofqanqactivityqthatqexceedsqitsqcost.
c.qthatqarisesqfromqtheqopportunityqcostqofqanqactivity.
d.qthatqarisesqfromqaqsmallqincreaseqinqanqactivityq-qCORRECTqqANSWER-
thatqarisesqfromqaqsmallqincreaseqinqanqactivity

107.qTradeqbetweenqtheqUnitedqStatesqandqThailand
a.qisqaqlosingqpropositionqforqThailandqbecauseqU.S.qworkersqareqmoreqproductive.
b.qisqaqlosingqpropositionqforqtheqU.S.qbecauseqThailandqhasqcheaperqlabor.
c.qisqlikeqaqsportsqcontest:qoneqsideqwinsqandqtheqotherqsideqloses.
d.qbenefitsqbothqtheqUnitedqStatesqandqThailandq-qCORRECTqqANSWER-
benefitsqbothqtheqUnitedqStatesqandqThailand

108.qOurqeconomicqmodelqwouldqleadqusqtoqpredictqthatqifqmonetaryqaidqperqchildqgivenqto
singleqparentsqincreasesqsubstantiallyq(holdingqeverythingqelseqtheqsame),
a.qchildrenqwillqbecomeqlessqscarce

,b.qsingleqpeopleqwillqhaveqmanyqmoreqchildren.
c.qsingleqpeopleqwillqhaveqfewerqchildrenqatqtheqmargin.
d.qsingleqpeopleqwillqbeqmoreqlikelyqtoqhaveqchildrenqatqtheqmargin.
e.qtheqnumberqofqchildrenqisqunlikelyqtoqchange,qbecauseqtheqdecisionqtoqhave
childrenqisqbasedqonqopportunityqcost,qnotqjustqaid.q-qCORRECTqqANSWER-
singleqpeopleqwillqbeqmoreqlikelyqtoqhaveqchildrenqatqtheqmargin.

109.qTomqisqtwiceqasqgoodqasqTimqatqproducingqwidgetsqandqthreeqtimesqasqgoodqasqprodu
cing
gadgets.qTherefore,
a.qTomqandqTimqwouldqnotqbenefitqfromqtrade
b.qTim'sqcostqofqproducingqwidgetsqisqhigherqthanqhisqcostqofqproducingqgadgets
c.qTom'sqcostqofqproducingqwidgetsqisqhigherqthanqTim'sqcostqofqproducing
widgets
d.qTimqhasqhigherqopportunityqcostsqthanqTom
e.qThereqisqnotqenoughqinformationqtoqdetermineqwhoqhasqhigherqcostsqorqifqtrade
wouldqbeqmutuallyqbeneficial.q-qCORRECTqqANSWER-
Tom'sqcostqofqproducingqwidgetsqisqhigherqthanqTim'sqcostqofqproducing
widgets

110.qIfqyouqsayqthatqexpandingqtheqfoodqstampqprogramqisqtheqrightqthingqtoqdo,qandqIqreplyqt
hat
expandingqtheqprogramqwillqleadqtoqlessqspentqinqotherqareas,qweqarequnlikelyqtoqhaveqaqme
etingqof
mindsqbecause
a.qyouqareqemphasizingqmarginalqbenefitsqandqIqamqemphasizingqmarginalqcosts
b.qmuchqofqtheqfoodqstampqprogramqisqalreadyqaqsunkqcost
c.qtheqbenefitsqandqcostsqofqfoodqstampsqareqlikelyqtoqbeqdifficultqtoqcalculate
d.qyouqareqmakingqaqnormativeqargumentqandqIqamqmakingqaqpositiveqargument
e.qyouqareqbeingqreasonableqandqIqamqbeingqaggravatingq-qCORRECTqqANSWER-
youqareqmakingqaqnormativeqargumentqandqIqamqmakingqaqpositiveqargument

111.qYouqwantqtoqbuildqaqnewqgarage,qandqaskqaqcontractorqforqaqbid.qHeqgivesqyouqaqtimeqa
nd
price.qYouqaskqhimqtoqcompleteqtheqgarageqinqhalfqtheqtimeqheqproposes.qWhatqwillqhappenq
toqthe
priceqandqwhy?
a.qTheqpriceqwillqriseqbecauseqyourqwillingnessqtoqpayqisqobviouslyqhigher
b.qTheqpriceqwillqriseqbecauseqtheqcontractorsqopportunityqcostqwillqbeqhigher**
c.qTheqpriceqwillqfallqbecauseqtheqcontractorqcanqgetqyourqgarageqoutqofqtheqwayqmore
quickly,qandqthusqmoveqonqotherqprojects
d.qTheqpriceqwillqnotqbeqaffectedqbecauseqtheqrelevantqcostsqareqsunkq-
qCORRECTqqANSWER-

Theqpriceqwillqriseqbecauseqtheqcontractorsqopportunityqcostqwillqbeqhigher

112.qTheqdifferenceqbetweenqaqmarginalqcostqandqanqopportunityqcostqis

, a.qmarginalqcostqisqtheqcostqofqtheqlastqunit,qwhileqopportunityqcostqisqtheqcostqofqthe
opportunityqsacrificed.
b.qmarginalqcostqinvolvesqdecisionsq"atqtheqmargin",qwhileqopportunityqcostqinvolves
alternatives.
c.qopportunityqcostqmakesqupqonlyqpartqofqmarginalqcost.
d.qAllqofqtheqabove
e.qThereqisqnoqdifferenceq-qCORRECTqqANSWER-Thereqisqnoqdifference

113.qIfqtheqU.S.qcanqmakeq10qrosesqorq40qdaffodilsqandqMexicoqcanqmakeq5qrosesqorq10
daffodils,qthen
a.qnoqtradeqisqpossible,qsinceqtheqU.S.qisqbetterqatqproducingqbothqrosesqandqdaffodils.
b.qtradeqwouldqmakeqbothqcountriesqbetterqoffqifqtheqU.S.qspecializeqinqrosesqandqMexico
inqdaffodils.
c.qtradeqwouldqmakeqbothqcountriesqbetterqoffqifqMexicoqspecializedqinqrosesqandqtheqU.S.qi
nqdaffodils.q
d.qMexicoqshouldqbuyqbothqdaffodilsqandqrosesqfromqtheqU.S.q-qCORRECTqqANSWER-
tradeqwouldqmakeqbothqcountriesqbetterqoffqifqMexicoqspecializedqinqrosesqandqtheqU.S.qinqd
affodils.

121.qYouqobserveqthatqaqhotqdogqvendorqlowersqhisqpricesqinqtheqlateqafternoon.qWhichqofqt
he
followingqisqaqplausibleqeconomicqrationale?
a.qTheqopportunityqcostqofqtheqhotqdogsqhasqfallen.
b.qPeopleqareqlessqlikelyqtoqbuyqhotdogsqinqtheqlateqafternoonqthanqearlierqinqtheqday.
c.qTheqmarginalqbenefitsqofqalternativeqactivitiesq(forqexample,qmeetingqfriendsqforqa
drink)qriseqinqtheqafternoon.
d.qAllqofqtheqabove.q-qCORRECTqqANSWER-Allqofqtheqabove.

122.q"Seniorqcitizensqdeserveqanqincomeqthatqwillqallowqthemqtoqliveqinqcomfortqforqtheir
remainingqyears."qThisqisqanqexampleqof
a.qaqnormativeqstatement.
b.qaqpositiveqstatement.
c.qneitherqaqpositiveqandqnormativeqstatement.
d.qaqstatementqreflectingqtheqconceptqofqscarcity.
e.qaqrecognitionqofqopportunityqcosts.q-qCORRECTqqANSWER-aqnormativeqstatement

123.qAfterqgraduatingqfromqhighqschool,qSteveqhadqthreeqchoices,qlistedqinqorderqofqprefere
nce:
(1)qmatriculateqatqClemson,q(2)qworkqinqaqprintedqcircuitqboardqfactory,qorq(3)qattendqaqrival
college.qHisqopportunityqcostqofqgoingqtoqClemsonqincludes
a.qtheqincomeqheqcouldqhaveqearnedqatqtheqprintedqcircuitqboardqfactory
b.qtheqdirectqcostqofqattendingqClemsonq(tuition,qtextbooks,qetc.)
c.qtheqbenefitsqheqcouldqhaveqreceivedqfromqattendingqtheqrivalqcollege
d.qAllqofqtheqabove
e.qJustqa.qandqb.q-qCORRECTqqANSWER-Justqa.qandqb.